UNAUDITED
INTERIM RESULTSFor the half year ended 30 November 2017
Increase in revenue to R13.5 billion*
Increase in PINless GTV by 27% to R12.4 billion
Increase in EBITDA of 9% to R778 million
Increase in earnings per share of 110% to 167.43 cents
Increase HEPS of 109% to 166.68 cents
Increase in core headline earnings per share of 108% to 168.42 cents
Increase in cash generated from operating activities to R3.1 billion
Acquisitions - Cell C and 3G Mobile
Acquisition – Airvantage after period end
* On including PINless top-ups, revenue increased by 10%
G r o u p h ig h lig h t s f o r t h e h a lf y e a r e n d e d3 0 N o v e m b e r 2 0 1 7
2
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
Nov 2013 Nov 2014 Nov 2015 Nov 2016 Nov 2017
R'0
00
EBITDA
-
2
4
6
8
10
12
14
Nov 13 Nov 14 Nov 15 Nov 16 Nov 17
R'b
illi
on
Gross PINless transactional values**
**includes gross electricity and PINless top-ups
SOUTH AFRICAN DISTRIBUTION
BRETT LEVY – JOINT CEO
‘Going for Growth’
Prepaid airtime, data and starter packs
Handsets and Tablets
Prepaid electricity and water
Ticketing
Financial and other Value Added Services
Cell C
Revenue up 2% to R13.3 billion
PINless top-up revenue increase by R1.2 billion to R4 billion:
• when imputed to revenue effective growth is 10%
Gross profit margin declined slightly to 7.68%:
• early settlement discounts forfeited to conserve cash
• partly offset by marketing rebates received
Growth plan
O p e r a t io n a l a n d F in a n c ia l H ig h lig h t s
4
-
500
1,000
1,500
2,000
2,500
3,000
3,500
Mil
lio
ns
Prepaid Airtime Revenue Growth
2017
2016
-
100
200
300
400
500
600
700
800
Mil
lio
ns
Direct Top Up - PINless Airtime Growth
2017
2016
Management team of experienced distribution professionals:
• systematic and clinical review of all business aspects
• “Going for growth” initiative
Ensuring customer centric approach
Identifying and focusing on growth pillars
Main/informal market:
• hub and spoke model
• small retail outlets
Relaunched brand identity - Blu Approved
‘G o in g f o r g r o w t h ’
5
Maintaining up to 800,000 new SIM connections/month:
• reinforcing market strengths of stability, trust and payment convenience
Campaigning by truck & footsoldier/gig-rigs
Exceptional growth in corporate channel’s banking sector
Maintaining constructive relationships with all networks
Competitive pricing from networks through bundled offerings
Current market:
• competitive pricing through bundled offering
• demand for data –> convergence of voice, data and content
• consumers migrating to smartphones driving data consumption
P r e p a id A ir t im e , D a t a a n d S t a r t e r p a c k s
6
Distributing a complete range of handsets and tablets from tier 1 to tier 4:
3G Mobile (tiers 1 and 2):
• distributing top-end smartphones and tablets - Apple, Samsung, Huawei, ZTE and Nokia; and
• financing for handset element of post paid and hybrid contracts – by CEC
• 47.37% acquired 2 Aug 2017– R900 million; 52.63% acquired 6 Dec 2017– R1 billion
• funding of remaining tranche on track
• tough market conditions
Existing handset and tablet business (tier 3):
• handsets, phones, tablets, POS devices, smart watches, fitness bands - Boost, Verssed,
Blaupunkt, Go, Vibe and Pulse
• online radio app Touch HD loaded onto hardware
Reware (tier 4):
• capitalising on market shifting from feature phones to inexpensive smartphones
• sources, refurbishes, certifies, repackages and distributes pre-owned smartphones
H a n d s e t s a n d T a b le t s
7
Distributing hardware ‘in the last mile’:
• mobile devices, tablets, wearables, accessories, gadgets, smart home
concepts & automation, wifi routers and laptops
Edgars Connect:
Stand alone store with unique proposition connecting to a mix of customer
needs, across a range of products:
• BLU Approved products and services
• Specialist services and expert advice
• 64 stores open, with 3 more launches shortly
R e t a il D is t r ib u t io n
8
Growth continues:
• commissions earned up 21% to R124 million
• equates to R8.4 billion in sales, up 20%
Growth drivers:
• Securing additional prepaid electricity contracts:
Buffalo City and NW405 Municipalities
• Bill Payments services:
Ekurhuleni and Cape Town Municipalities
P r e p a id E le c t r ic it y a n d W a t e r
9
-
200
400
600
800
1,000
1,200
1,400
1,600
Mil
lio
ns
Prepaid Electricity - Revenue
2017
2016
2015
Ticketing for events, sports and transport sectors
Growing market share at 28%
Long-term ticketing arrangements:
• Spar, FMCG chain
• Putco, commuter bus service:
transporting 250,000 passengers/month
Ticketpro at >200 merchant outlets on key routes
2.9m tickets sold
82 different venues served
Revenue up by 79%
T ic k e t in g
10
Rapid growth in digital capabilities across banking sector:
• e.g. 71% of all transactions through self-help devices at Capitec
Bill Payments:
• processing ~535,000 transactions/month for 187 bill issuers
• revenue up by 25%
• number of transactions increased by 32%
F in a n c ia l a n d o t h e r V a lu e A d d e d S e r v ic e s
11
>100%
C e ll C – A t u r n a r o u n d s t o r y u n d e r p in n e d b y s u s t a in a b le g r o w t h
12
Service Revenue
R’bn EBITDA
R’bn
8.8
10.210.8
11.813.1
2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7
63.2%
>100%
5.9% 9.3%
RECAPITALISATION PROCESS
12%
0.8 0.4
1.93.1
7.8
2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7
R e p o r t
e d >100%
15.9%
2017
Innovation-driven revenue
growth
Price-driven revenue
growth
2012-13
2015-16
Recapitalisation:
• New shareholders - equity R7.5 billion
• Debt for equity conversion - R9 billion
• Restructured debt - R6 billion
2018 & beyond
• Innovation
• Service
• Quality
• People
3.7
-0.7
C e ll C – H ig h lig h t s : F Y 2 0 1 7 K e y p e r f o r m a n c e in d ic a t o r s
13
+12% YOY
Service Revenue
R13.2 billion
+151% YOY
EBITDA
R7.8 billion
+660%
Net profit after tax
R4.1 billion
+7% YOY
Revenue
R15.7 billion
+29% YOY
EBITDA Margin
50%
8% of revenue
Capital Expenditure
R1.2 billion
Summary of reported financial information
C e ll C - P o s it iv e r e s u lt s F Y 2 0 1 7
14
R’m 2017 2016 % Change
Service revenue 13 147 11 752 12
Non-service revenue 2 568 2 894 11
Total revenue 15 715 14 646 7
Gross margin 8 170 7 454 10
Gross margin % 52% 51% 1
EBITDA 7 793 3 106 >100
EBITDA margin % 50% 21% 29
Net profit after tax 4 114 541 >100
NORMALISED FINANCIAL KEY PERFORMANCE INDICATORS
C e ll C – F Y 2 0 1 7 R e s u lt s
15
R’m7 months 2017
Pre-recap5 months 2017
Post-recapTotal 2017
Dec2016 Dec
% Change
Total revenue 9 013 6 702 15 715 14 646 7
Normalised EBITDA 1 960 1 694 3 654 2 892 26
Normalised EBIT 792 796 1 588 1 121 42
Net finance costs -2 661 -1 064 -3 724 -801 >100
Normalised net (loss)/profit before tax -1 869 -267 -2 136 320 >100
Tax - 2 111 2 111 - -
Normalised net (loss)/profit -1 869 1 844 -25 320 >100
INTERNATIONAL DISTRIBUTION
MARK LEVY – JOINT CEO
Technology
Oxigen Services India
Blue Label Mexico
Mobile Segment
Solutions Segment
Group Prospects
T e c h n o lo g y in o u r e c o s y s t e m
Capabilities and offerings advance, strengthened by acquisitions
AEON platform expanding by incremental layering offering more solutions
Positive inflection - technology stack re-energising business models
Customers gaining access to our products and services
Ecosystem is de-commoditised with VAS driving customer experience
Direct correlation in technology, foot traffic and sales
AEON links suppliers and partners
Technology stack extends reach and opportunities
• 1.5 billion transactions/month
17Large Store Revenue growth with increased BLT Category Penetration
Medium Store Revenue growth with increased BLT Category Penetration
O x ig e n S e r v ic e s In d ia - S y n o p s is
Core businesses provides financial services and a universal payments platform:
• offline: POP devices in retail outlets
• online: e-wallet platform for subscribers
Government’s digitisation of cash economy
Guidelines and legislation for Fintech sector
Oxigen pursuing offline opportunities
Demonetisation impacting revenue and profitability
18
Jun July Aug Sep Oct Nov
Total Revenue (GTV)
H1 16-17 H1 17-18
O x ig e n S e r v ic e s In d ia – O f f lin e A ir t im e R e c h a r g e a n d B a n k in g
Serving >200,000 retail merchants nationwide
Expanding digital footprint by rolling out micro-ATM’s
Aligns with Government’s financial inclusion agenda
Requires capital investment
With ICICI Bank in tier 2 and 3 cities:
• enabling cash deposits, withdrawals, bill payments, travel ticketing
• act as service delivery and payment points
Business Correspondent Banking services:
• revenue growth 14%:
• Adarsh Credit Co-operative Society with 809 branches
• Goa State Co-operative Bank with 67 branches
19
Jun July Aug Sep Oct Nov
Business Correspondent Banking
H1 16-17 H1 17-18
O x ig e n S e r v ic e s In d ia – O n lin e W a lle t s
Online e-wallet platform for subscribers
B2B2C approach of acquiring subscribers by white labelling:
• loyalty service platform with retailer Future Group with >30m customers
• Amazon gift cards, Fast Tag recharge and bus booking & ticketing
20
B lu e L a b e l M e x ic o - H ig h lig h t s
Share of loss continues to narrow from R22.1 million to R10.5 million
Revenue improve 27% to R1.9 billion
Gross Profit increase 73% by R35 million
Increasing transactional throughput by continuous process improvements
92,000 devices installed
21
$350
$360
$370
$380
$390
$400
$410
$420
$430
$440
Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17
MX
P M
illi
on
s
Revenue
Revenue
$-
$5
$10
$15
$20
$25
Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17
MX
P M
illi
on
s
Gross Profit
Gross Profit
76,000
78,000
80,000
82,000
84,000
86,000
88,000
90,000
92,000
94,000
Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17
Th
ou
san
ds
Deployed Terminals
Deployed Terminals
B lu e L a b e l M e x ic o – A ir t im e t o p -u p a n d S IM c a r d s
Airtime
Revenue growth
Higher ARPU’s
Merchants benefiting from enhanced platform
SIM cards
Distribution gaining traction
Market maturing gradually
Focus on driving commercial opportunities, risk mitigation,
improving customer experience
Sims offer competitive advantage
Combining our experience with Grupo Bimbo’s distribution network
22
Jun Jul Aug Sep Oct Nov
SIMS Revenue
2016 2017
Jun Jul Aug Sep Oct Nov
ARPU
2016 2017
Jun Jul Aug Sep Oct Nov
Airtime Revenue
2016 2017
B lu e L a b e l M e x ic o – B ill P a y m e n t s a n d F in a n c ia l S e r v ic e s
Bill Payments
Growth continues steadily
Revenue increasing 34%
Total transactions up >30%
>41% of devices transact in bill payments
Financial Services
Transacting across 26% of terminal base
Total number of transactions increased by 32%
Revenue increased by 68% through compounding growth in:
• credit and debit card acquiring
• food voucher distribution
23
Jun Jul Aug Sep Oct Nov
Revenue Bill Payments
2016 2017
Jun Jul Aug Sep Oct Nov
Revenue Financial Services
2016 2017
M o b ile S e g m e n t
Complete ecosystem of services for mobile phone users
Encompasses Integrated communications, VAS infotainment & entertainment; Financial services, Marketing
Core net profit up by 8% to R27.5 million
Via Media:
• extensive catalogue of content, products and services:
lifestyle, sport, news, weather, religion, dating
• to mobile phone users across B2B and B2C platforms
• across 9 African countries and in 10 languages
• derives annuity income
Cellfind:
• comprises converged communications, mobile financial services and value added services, such as LBS:
• bulk SMS distribution increasing to ~260 million per month
• focus on local and international SMS traffic
24
A ir v a n t a g e
Expanding mobile financial services
Initial 60% acquired wef 2 Jan 2018 for R151 million
Customers acquire airtime in a different manner
Airvantage bears 100% risk
Algorithmic systems create behavioural scores -> present most appropriate offer to subscriber
>100 million transactions monthly, sales >$1 billion to date across 12 emerging markets
Recent launch with TIM Brazil, covering 93% of urban area
25
S o lu t io n s S e g m e n t
Data scientists supplying analytical services
Core net profit increase by 21% to R13.7 million
Growth driven by:
• sending 717m SMS’s, and
• generating 2.3m unique leads
Ensuring database of >37 million opt-in entries:
• relevant
• compliant
• POPI and FAIS Acts
JV with United Financial Group:
• United Call Centre Solutions – 330 agents
• marketing Value Added Services
26
G r o u p P r o s p e c t s
‘Going for growth’. In line with the Group’s strategy to continue expanding distribution footprint and product offerings, focus will be
on further penetration of the informal market, through the provision of POS devices to the multitude of independent traders who do
not have the tools to market and sell Blue Label’s products and services.
Blue Label is one of the primary distribution channels for Cell C products and services. Our investment in Cell C provides a
compelling value proposition to the Group, to Cell C and its customers, through vertical integration that will afford both companies
the opportunity to realise synergies in product distribution. Cell C now has a sustainable capital structure to deliver on its strategic
objectives.
3G Mobile is one of Africa’s largest distributors and financiers of mobile devices and handsets to major retailers and cellular
network providers. It has distribution rights for all major tier one and tier two mobile devices and allied products from the
manufacturers thereof. Through its wholly owned subsidiary, Comm Equipment Company, it provides the financing of the mobile
handset component of postpaid and hybrid contracts to Cell C, with the capability of extending such services to other networks and
channels. These functions supplement Blue Label’s strategic objectives to provide value added services to both Cell C and its own
customer base. 3G Mobile provides the ideal platform to combine Blue Label’s low cost and certified pre-owned mobile handset
divisions into a consolidated group. The acquisition thereof is both earnings accretive and provides a solid foundation for
distribution into the burgeoning low cost smartphone market.
27
G r o u p P r o s p e c t s - 2
The proprietary software developed by Airvantage will afford Blue Label the opportunity to apply such intellectual capital
within the Group, thereby enabling it to broaden its customer base. It is the intention of Airvantage to emulate its robust
business model internationally in the near future.
Through Blue Label’s entrenched relationship with numerous municipalities on whose behalf prepaid electricity is sold and
the proceeds thereof collected, it is the intention to supplement these services with a full turn-key revenue management
system, credit control services, audits, meter replacements and new installations.
Following Blue Label Mexico’s continuous improvement in operations, it is expected to provide a positive contribution to
Group profitability, given its consistent growth in revenue generation at sustainable improved gross profit margins and
compounding annuity revenue generated from starter packs.
“Big Data” creates the opportunity to upsell and cross sell the various bouquets of products and services that Blue Label
has to offer, through its distribution channels, by intelligently understanding consumer behaviour.
28
FINANCIAL OVERVIEW
DEAN SUNTUP – FINANCIAL DIRECTOR
F in a n c ia l - H ig h lig h t s
30
INCREASE IN REVENUE TO INCREASE IN HEADLINE EARNINGS PER SHARE
R13.5 billion* 166.68 cents
INCREASE IN EBITDA TO INCREASE IN CORE HEADLINE EARNINGS PER SHARE
R778 million 168.42 cents
INCREASE IN EARNINGS PER SHARE TO INCREASE IN CASH GENERATED FROM OPERATING ACTIVITIES TO
167.43 cents R3.1 billion
*On inclusion of the gross amount generated on "PINless top-ups", the effective increase equated to 10%
F in a n c ia l – A d ju s t e d C o r e H e a d lin e E a r n in g s
31
Nov 2017 Nov 2016 Growth Growth
R’000 R’000 R’000 %
Core headline earnings 1,356,780 552,425 804,355 146%
Weighted average number of shares 805,590,826 683,824,520
Core HEPS (cents) 168.42 80.78 87.64 108%
Core headline earnings adjusted for:
Share of profits from Cell C excluding amortisation on intangible assets (927,643) -
Share of profits from 3G Mobile excluding amortisation on intangible assets (35,824) -
IFRS interest expense relating to 3G Mobile acquisition 21,194 -
Cessation of settlement discounts and interest forfeiture 91,414 -
Share of losses from India and fair value gain (556) (135,577)
Adjusted core headline earnings 505,365 416,848 88,517 21%
Adjusted weighted average number of shares 668,535,753 666,664,546
Adjusted core HEPS (cents) 75.59 62.53 13.06 21%
- Acquisition of Cell C R5.5bn
- CAPEX loan to Cell C R740m
- Acquisition of PPE and
intangibles R46m
- Bond notes R79m
- Contingent considerations
R28m
- Share issue R2.75bn
- Dividends R371m
- Treasury shares R29m
F in a n c ia l – C a s h F lo w
32
Nov 2017 Nov 2016
R’000 R’000
Cash generated by operations 3,297,462 945,583
Interest received 43,702 25,693
Interest paid (40,642) (65,819)
Taxation paid (184,522) (196,074)
Cash flows from operating activities 3,116,000 709,383
Cash flows from investing activities (6,345,713) (206,902)
Cash flows from financing activities 2,350,250 (259,607)
(Decrease)/increase in cash and cash equivalents (879,463) 242,874
Cash and cash equivalents at the beginning of the period 1,350,666 589,027
Translation difference - (36)
Cash and cash equivalents at the end of the period 471,203 831,865
F in a n c ia l – M a t e r ia l c a s h o u t f lo w s
33
R’000
Cell C acquisition (5,500,000)
Placement of shares 2,750,000
Cell C capital expenditure loan (740,000)
Dividend paid in September 2017 (349,804)
Treasury shares purchased for employee share scheme (28,846)
$6m bond notes (79,050)
Contingent consideration settlements (27,868)
Material cash outflows to November 2017 (3,975,568)
Viamedia final acquisition payment (26,415)
Capital contribution to Oxigen India (36,200)
Airvantage acquisition (150,732)
Material cash outflows post November 2017 to February 2018 (213,347)
Total material cash outflows to February 2018 (4,188,915)
THANK YOU
Q & A
SUPPLEMENTARY INFORMATION
S u p p le m e n t a r y – B lu e L a b e l f a c t s h e e t
Founded in 2001
Business model underpinned by long-term distribution contracts
Products and services include
• airtime, starter packs, data and content
• handsets and tablets
• electricity and water
• ticketing
• financial and value added services
45% held in mobile network operator Cell C
Other investments in India and Mexico
Maiden dividend paid in September 2010
CSI spend R8.5 million and training, development & bursaries R9.4 million (FY17)
36
S u p p le m e n t a r y – C h a r t in g o u r g r o w t h
37
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
Nov 2013 Nov 2014 Nov 2015 Nov 2016 Nov 2017
R'm
illi
on
Revenue
0.00
200.00
400.00
600.00
800.00
1,000.00
1,200.00
Nov 2013 Nov 2014 Nov 2015 Nov 2016 Nov 2017
Cen
ts
NAV per share
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
Nov 2013 Nov 2014 Nov 2015 Nov 2016 Nov 2017
R'0
00
EBITDA
-
2
4
6
8
10
12
14
Nov 13 Nov 14 Nov 15 Nov 16 Nov 17
R'b
illio
n
Gross PINless transactional values*
*includes gross electricity and PINless
G r o u p O p e r a t in g s t r u c t u r e a s a t 3 0 N o v e m b e r 2 0 1 7
38
Transaction Junction (60%)
100% unless otherwise stated* Post period end** 52.63% acquired post period end
Blue Label
South Africa
The Prepaid Company
Ventury
Blue Label Distribution
Edgars Connect (40%)
Cigicell (74%)
Ticketpro
Blue Label Connect
Prepaid24 (50.1%)
Utilities World (25.1%)
Reware (50.4%)
Blue Label Mobile
SupaPesa Africa (50%)
Simigenix (51%)
Panacea (51%)
Cellfind
Viamedia (75%)
Supa Pesa South Africa (50%)
Blue Label One
Blue Label
International
Blue Label Mexico (47.56%)
Oxigen Online Services
India (58.18%)
Gold Label Investments
Oxigen Services India
(58.88%)
Mpower
(21.6%)
Blue Label Solutions
CNS Call Centre
Blue Label Data Solutions (81%)
Datacision(50%)
Datacel
United Cell CentreSolutions (50%)
Corporate
Blue Label Accelerator
3G Mobile **
Cell C (45%)
Airvantage (60%) *
S u p p le m e n t a r y – B a r r ie r s t o e n t r y
Lag times in negotiating supplier and customer contracts can hinder integration
Long term contracts – ensure there is no cheaper pricing in the market
Lock-out periods for processing new and developing existing technologies. Roll-out of devices takes time
Time: as customers prioritise systems’ integration for their own needs/objectives and/or products and services (customer,
forecourt, municipality, utility, bank, retailer)
Technology platforms – AEON (proprietary, agnostic, neutral aggregator, plug ‘n play, proven, scalable, no fees to others)
and Postilion (banking and financial services grade)
Expanding distribution channel: >150,000 POP’s in SA, ~200,000 POP’s in India, and >92,000 POP’s in Mexico
Reputable local partners is key to business model
Trust and relationships of over 15 years in business
These are some of our greatest assets, achieved through long-term contracts with customers and suppliers, which fortify our
foundations
These same barriers can hinder us entering new markets
39
S u p p le m e n t a r y – P e e r g r o u p
40
» B lu e L a b e l T e le c o m s
- J S E lis t e d
» B la c k h a w k N e t w o r k
N a s d a q lis t e d
» C y b e r p la t - R u s s ia n
b a s e
» E c k o h – A IM lis t e d
» E u r o n e t W o r ld w id e -
N a s d a q lis t e d
» N E T 1 – N a s d a q
lis t e d
» P a y p a l – N a s d a q
lis t e d
» P a y P o in t – L S E lis t e d
» Q iw i – N a s d a q lis t e d
» In C o m m – p r iv a t e ly
h e ld in U S A
» Cigicell / Blue Label Telecoms
» Conlog
» Contour
» Easypay
» ONTEC
» Landis & Gyr
» Syntell
» Red Qiubo / Blue Label Mexico
» ATM
» OXXO
» Sucursales bancarias
» Pemex
» WalMart
» Elektra - Banco Azteca
» Telecomms
» 7-Eleven
» Circulo K
» HSBC
» Famsa
* Descending in size
*
» Ticketpro / Blue Label
Telecoms
» Big Concerts / Computicket
» Computicket / Shoprite
» Itickets
» Nuticket
» Quicket
» Webticket / PicknPay
VERTICAL
PEERSHORIZONTAL PEERS
ELECTRICITY
HORIZONTAL PEERS
TICKETING
NETWORKS BY POS DEVICE
MEXICO*
S u p p le m e n t a r y – S h a r e h o ld e r P r o f ile a t 3 1 J a n u a r y 2 0 1 8
41
Top Shareholders:
• Allan Gray clients – 15.9%
• Shotput – 11.4%
• B Levy – 7.29%
• M Levy – 6.4%
• Old Mutual – 5.3%
• Investec AM – 3.1%
• PIC – 3.1%
• Sanlam – 2.9%
• All Weather – 2.1%
• Standard Bank – 2%
Notes:
• Shareholders holding >2% of issued capital account for 52% of total
issued share capital
• ADR programme through BNY Mellon
• Market capitalisation R10.6 billion (at R12/share)
• Ranked 23rd in Sunday Times Top 100 Companies over 5 years (Nov 2017)
Beneficial Shareholders - 31 Jan 2018
South Africa 83% USA 8% UK 3% Rest of World 6%
Free Float - 31 Jan 2018
Free float 66%
Strategic holders 32%
Below threshold 2%
THANK YOU